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Minimum Wage Watch 2014

States in 2014 will be addressing increasingly difficult labor issues, including concerns over raising the minimum wage. President Obama and some members of Congress have called for an increase in the federal minimum wage, but some states already have taken action. Legislators and voters in five states decided to raise the minimum wage in 2013 and more states are likely to consider the issue in 2014.

Raising the minimum wage is a big topic this year for both state and federal legislators, but the issue remains controversial.

Proponents of raising state minimum wages argue that while the federal rate has remained stagnant—it hasn’t increased since 2009—the costs for housing, food, utilities and health care have continued to climb. This leaves those earning minimum wage with less money to afford the basics, which in turn puts downward pressure on the demand for goods and services.

Opponents warn that raising the wage now would have a negative impact on businesses—especially during anemic economic times—and that a minimum wage hike actually hurts those it intends to help by forcing employers to cut jobs or hours at the low end of the pay scale.

Millions of workers across the country earn the minimum wage or less.1

The federal minimum wage is $7.25 per hour. Someone working at that rate for 40 hours a week for 52 weeks a year earns $15,080, just below the poverty level for a two-person household.

In 2012, an estimated 3.6 million people—or 4.7 percent of all hourly paid workers—made at or below the federal minimum wage.

About 2 million people earned below the minimum wage in 2012. That could be due to Fair Labor Standards Act violations or permitted exemptions to the minimum wage law.

On the other end of the scale, 1 percent of workers in Alaska earn at or below the minimum wage–the smallest percentage of any state–followed by Oregon (1.1 percent) and California (1.4 percent).

The young and the undereducated are more likely to earn the minimum wage, although those older than 25 make up a significant portion of the people earning at or below the minimum wage.2

In 2012, half of those earning at or below the minimum wage were ages 16-24. About 24 percent of those earning minimum wage were 16-19, which means that 76 percent of those earning minimum wage were older than 20.

Those without a high school diploma were more than twice as likely to be in a minimum-wage job as their high school graduate counterparts in 2012. About 10 percent of hourly paid workers without a high school diploma earned the federal minimum wage or less last year, compared to about 4 percent of those who had a high school diploma with no college and about 2 percent of college graduates.

Women made up 64 percent of minimum wage earners in 2012.

Wage floors vary throughout the country, as some states set their rate higher than the federal minimum.3

Although most states establish their own minimum wages legislatively, federal minimum wage law supersedes state law. That means if the minimum wage established by the state is higher than the federal rate, the state rate applies. If the state’s minimum rate is lower than the federal rate, the federal rate applies. Alabama, Louisiana, Mississippi, South Carolina and Tennessee don’t have an established minimum wage requirement.

Only four states—Arkansas, Georgia, Minnesota and Wyoming—have a minimum wage set below the federal rate.

Twenty states have a minimum wage that is the same as the federal rate.

Twenty-one states4 have rates higher than the federal rate, ranging from a low of $7.40 per hour in Michigan and $7.50 in Maine, Missouri and New Mexico to a high of $9.32 per hour in Washington state.

In 10 states—Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washington—minimum wages are linked to the consumer price index. For these states, the minimum wage is usually increased each year, generally around the first of the year. On Jan. 1, 2014, these states, except for Nevada, increased their wages.5

Increases ranged from 10 cents an hour in Arizona, Montana and Ohio, to $1 an hour in California and New Jersey.

For nine states, the increased minimum wage is because the rate is linked to inflation. In three states—Connecticut, New York and Rhode Island—the increase is due to legislative action.

In 2013, voters approved a constitutional amendment in New Jersey to raise the minimum wage by $1 and tie automatic annual increases in the future to the Consumer Price Index.

In addition to these 13 states, California’s minimum wage will increase from $8 an hour to $9 an hour on July 1, 2014. In New York, the wage is scheduled to increase to $8.75 per hour on Dec. 31, 2014.

References:

1 U.S. Department of Labor, Bureau of Labor Statistics, Characteristics of Minimum Wage Workers: 2012. 2 Ibid.3 U.S. Department of Labor, Wage and Hour Division, "Minimum Wage Laws in the States - January 1, 2014." 4 Although both Nevada and Ohio are included in the list of states with minimum wages higher than the federal rate, there are some notable exceptions. The minimum wage in Nevada of $8.25 is required for workers not offered health benefits insurance by their employers. If health benefits are provided, the wage is $7.25, the same as the federal rate. Ohio’s minimum wage of $7.95 applies only to employers who gross more than $292,000. If an employer grosses less than $292,000, the federal minimum wage applies.5 If an annual inflation adjustment is made in Nevada, the adjustment goes into effect in July.6 U.S. Department of Labor, Wage and Hour Division, "Minimum Wage Laws in the States - January 1, 2014."